With an international audience assembled last week in Long Beach, CA, only a couple of miles from one of the proposed sites for the West Coast’s first liquefied natural gas (LNG) receiving terminals, a mixture of industry, government, consulting and consumer representatives outlined a mostly hopeful, but by no means assured, vision of LNG imports along the West Coast.

Accelerated safety concerns in the wake of the tragic accident that killed 27 at an Algerian LNG plant last month, unsure economics and ever-lurking environmental questions — along with the fact that the industry is split over onshore or offshore siting — left some real doubts at the end of the Pacific Coast LNG Development Conference. The only consensus was that North America needs an injection of new gas supplies and/or massive demand-reduction programs in the near future, given the declining reserves in both Canada and the United States.

There are only two real alternatives — piping natural gas from Alaska’s North Slope or LNG importing — and LNG makes the most economic sense, according to Chris Theal, the principal researcher at Tristone Capital in Calgary. Theal doesn’t think a gas pipeline from Alaska’s North Slope will ever be constructed.

An executive with Mitsubishi Corp.’s Sound Energy Solutions (SES) subsidiary, which is proposing to build a terminal on 24 acres of a former U.S. Navy base in Long Beach Harbor, touted his proposed plant’s safety, environmental potential for mitigating port air emission problems and its proximity to the local utility transmission pipeline system. Meanwhile, an executive from ChevronTexaso told the conference that his firm had thoroughly examined West Coast LNG import sites and decided the offshore is the only viable place to go. ChevronTexaco has chosen offshore North Baja California for its terminal.

Michael Christensen, multi-facilities project manager for ChevronTexaco Global Corp., said he is not concerned about the debate over whether more than one receiving terminal will be built along the Pacific Coast of North Baja because he is confident his offshore site, which is still awaiting its first permits from the Mexican government, ultimately will be the first one opened. Through it regasification facilities, ChevronTexaco intends to flow its “stranded gas” from Australia’s Northwest Shelf.

With reliability and safety being a part of almost every presentation at the two-day conference, SES COO Tom Giles admitted during the Q&A that the Algerian tragedy has hurt the proposals for new LNG import terminals throughout the United States. He thinks that the increased concerns among policymakers, government officials and the general public can be overcome, but further seeds of doubt have been planted.

“Obviously there is not a receiving terminal in the world that has a steam boiler in it,” said Giles, referring to the source of the explosion and ensuing fires at the Algerian liquefaction plant. “Steam boilers are a problem if they are 30 years old and have been red tagged. To find one in the United States you would have to go to a coal-fired power plant or a refinery.”

Nevertheless, Giles said the incident is “causing trouble,” but mainly with people who “don’t want to deal with the facts of what happened; they just want to use it to make it look like an LNG accident when it wasn’t really an LNG accident. It is a terrible tragedy that happened in a country that doesn’t need another tragedy, but it is not an LNG incident. We’ll just have to keep explaining what happened, although obviously it would have been a lot better if it never happened — for our project and every LNG project in the country.”

Marc Hopkins, an international oil/gas shipping expert with BP Shipping, and William Bailey, a private-sector security consultant who serves as an advisor to California’ homeland security task force, dealt with various aspects of LNG safety and its worldwide ship trafficking, but they stressed that technological advances and security planning sophistication can help manage the risks.

While there remain a whole host of public policy and regulatory issues, not the least of which is who pays for it and whether it is economically sound to commit to long-term LNG contracts, there are equally vexing operating and technical issues that experts such as Hopkins and Larry Martin, a Houston-based energy engineering consultant whose experience with LNG dates back to the mid-1970s with Superior Oil, are paid to stay up late pondering.

Martin deals with questions of how much refinement is done to the LNG at the liquefaction facilities and then where and how you regasify it and put it into the existing onshore pipeline structure in the United States. The answers to where and how it is injected into the system can vary depending on the geographic location with it being much easier to integrate into the south-southeast supplies flowing from the Gulf of Mexico than it might be to mix it with supplies flowing in the Sempra Energy utility transmission pipeline and storage system.

“There are a lot of ripple effects to the processing of LNG that you have to pay attention to from an operating standpoint,” said Martin, who offered several suggestions for mitigating against possible adverse effects of integrating the LNG supplies into the domestic flowing gas, such as “dedicated LNG pipelines from storage to power plants or other end-users” and additional processing of the LNG at its receipt and storage location.

In the public policy arena, officials from both California and Mexico expressed a commitment to giving proponents of LNG import projects, many of whom had representatives in the audience, a chance to make their cases for new receiving terminals, but it is still unclear how many and where (onshore or offshore) those facilities will be built.

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